Don Marostica: Colorado budget is citizens' responsibility

Small Business Development Center's Business in Action Forum provides education, networking

Don Marostica, former executive director of the Colorado Office of Economic Development and International Trade, speaks about the state budget during the Small Business Development Center's Business in Action Forum on Wednesday. (Callie Jones/Journal-Advocate)

STERLING — The Northeast East Central Colorado Small Business Development Center hosted its first Business in Action Forum for this area on Wednesday at Northeastern Junior College.

Dick Pickett, executive director of the SBDC, started the meeting discussing the organization, which provides free services to small businesses.

Their goals are to help small businesses maximize their potential by helping them with marketing, finance, operations and setting goals; provide education; and help small businesses obtain funding.

Keynote speaker Don Marostica, former director for Colorado Office of Economic Development and International Trade, spoke highly of the SBDC, noting the many success stories he saw with businesses that went through the SBDC programs during his time in office.

His presentation focused on the state budget, which he described as the “Colorado family budget.”

“It's your money,” Marostica told the audience. “We the citizens of Colorado control this. TABOR allows us to vote on this; it allows us to control this Colorado family budget.

“It's not the legislature, it's not the lobbyists, it's not the governor that's going to dictate what Colorado's going to look like in the future -- it's you and it's your responsibility.”

He pointed out that although the state has been recovering after suffering two recessions, Colorado is still facing some really difficult economic times.

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The governor's proposed budget for 2013-2014 does show some extra money, but Marostica said that's a one-time event.

“A lot of people this year have run out and sold things because they're afraid that the taxes are going to go up, especially on capital gains. So, we're going to have some extra money and you're going to see this next legislative session there's going to be some money put in reserves and that kind of thing.”

Guests at the Small Business Development Center's Business in Action Forum had an opportunity to network and attend classes on legal issues, marketing, human resources and finances. (Callie Jones/Journal-Advocate)

Right now, if the state runs out of money, Colorado can only survive 14 days with the 4 percent reserve it has set aside. Marostica noted the governor is trying to put 5 percent in reserves, enough for about 20 days, and at some point Senate Bill 228 will allow 6.5 percent in reserves, but that's still only enough for 30 days.

He pointed out that if the state continues on its current economic path, in about 10 to 12 years there will only be enough money in the state budget for K-12 education, healthcare and prisons.

“That means there will be no money for higher education. There's not going to be any money for human services, there's not going to be any money for the state judiciary system, there's not going to be any money for the Colorado State Assembly and there's no money for the governor's office.”

Over the last four fiscal years, $5.8 billion has been cut from the state budget by laying off employees, closing prisons, using all the state's reserves and redirecting money. In 2009, federal stimulus funds were the only way Colorado was able to balance its budget.

He talked about the effect of changes in taxes.

In 2001, sales and use taxes were lowered from 3 percent to 2.9 percent, where it remains today, and Colorado's current income tax rate for both individuals and corporations is a flat tax of 4.63 percent. Before 1987 it was a graduated tax; individuals and corporations paid according to income. In 1987 it was changed to a flat tax of 5 percent and in 2000 Governor Bill Owen lowered the tax rate to 4.63 percent.

“If we left sales and use tax at 3 percent and we left our corporate and income taxes a flat rate of 5 percent, we'd be able to go about another 23 years without the problems you see,” Marostica said. “Nobody realized how deep these recessions were going to be.”

Though he said adding jobs is important, Marostica noted if the jobs in the state grow at the rates they were in 2008, it won't help. By 2024 the state will have 20 percent less money to spend in the state budget.

“We can't grow our way out of it,” he said. “It's impossible. With our current statutory provisions and our current Constitution we can't grow our way out of it.”

He also spoke about energy and environment and how those will impact the economy.

“Energy is going to get more expensive,” Marostica said. “The more the U.S. fossil energy companies control our own energy, the higher the prices are going to go.”

“I think we're going to see some subsidies on wind and we're going to see some subsidies on biodiesel, we're going to be seeing some subsidies that we'll be spending our own money on, but this is going to get more expensive.”

If energy prices go up, that, as well as the increase in population, will lead to food prices going up and that means the economy will go down.

Marostica encouraged the audience to spend time thinking about what can be done.

“The Colorado we enjoy today did not happen by accident. There was a lot of smart people that made the state where it is today, and it won't stay -- it's not going to stay a great state by accident either.”

“We have to set our priorities. We're going to have to have some really deep talk about the future and the state budget.”

He was asked how he would fix the budget situation if he were in charge.

“We can raise our sales taxes back up to where they were and/or we could also raise our personal income and corporate taxes,” Marostica answered. “We have to be careful but we could. It's not much, but it makes a big difference in the state budget.”

Following the opening session, participants were invited to attend classes on legal issues, marketing, human resources and finances. They closed out the day with a networking opportunity.

For more information on the SBDC, visit www.neeccosbdc.org or call (970) 571-2840.

RE-1 Valley School District has announced its policy for determining eligibility of children who may receive free and reduced price meals served under the National School Lunch and School Breakfast Program.
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